On Tuesday, the world’s biggest cryptocurrency exchange Binance announced that it had signed a letter of intent and is set to acquire its biggest rival FTX. The announcement comes as a big shock to the business and cryptocurrency worlds.
Surprisingly, the deal follows a social media scuffle between the CEOs of both companies.
According to Binance’s CEO Changpeng Zhao, the company decided to acquire FTX after its CEO, Sam Bankman-Fried asked Binance for help. “To protect users, we signed a non-binding LOI, intending to fully acquire FTX and help cover the liquidity crunch. We will be conducting a full DD in the coming days,” Changpeng Zhao shared in a tweet.
This afternoon, FTX asked for our help. There is a significant liquidity crunch. To protect users, we signed a non-binding LOI, intending to fully acquire https://t.co/BGtFlCmLXB and help cover the liquidity crunch. We will be conducting a full DD in the coming days.
He, however, added that “Binance has the discretion to pull out from the deal at any time.”
“The important thing is that customers are protected,” Sam Bankman-Fried said. The financial terms of the deal are yet to be disclosed but analysts do not expect it to be a great deal, especially for FTX investors. FTX was valued at $32 billion in a financing round earlier this year. The completion of the deal may most likely attract the scrutiny of regulators.
FTX’s CEO showed his gratitude to Binance on Tuesday. According to him, the deal was “a user-centric development that benefits the entire industry.” In a tweet, he said that “CZ has done, and will continue to do, an incredible job of building out the global crypto ecosystem, and creating a freer economic world.”
He also mentioned that FTX is working on clearing the withdrawal backlog. “This will clear out liquidity crunches; all assets will be covered 1:1. This is one of the main reasons we’ve asked Binance to come in. It may take a bit to settle etc. — we apologize for that,” he said.
Ibhadojemu Lucky Emmanuel is a graduate of Education and Economics from the University of Benin. He has a passion for tech and business and has been writing professionally for over a period of five years. He's written across various topics and segments and knew tech-business was it when he first stumbled on it. He has a great passion for music and arts, and wants to visit as many countries as he can someday.
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